Anti-Corrosion Pte Ltd v Berger Paints Singapore Pte Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 02 November 2011
• Neutral Citation: [2011] SGCA 57
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal Nos 224 and 240 of 2010 (Suit No 989 of 2009)
• Published date: 10 November 2011
• Year: 2011
• Hearing Date: 28 April 2011
• Plaintiff Counsel: Philip Fong Yeng Fatt, Jonathan Yuen Djia Chiang and Joana Teo Swee Ling (Harry Elias Partnership LLP)
• Defendant Counsel: Ang Cheng Hock SC, Sathiaseelan s/o Jagateesan, Kenneth Lim Tao Chung and Ramesh Kumar Ramasamy (Allen & Gledhill LLP)
• Subject Matter: Contract,Breach,Commercial Transactions,Sale of Goods
• Citation: [2011] SGCA 57

V K Rajah JA (delivering the judgment of the court): Introduction

This appeal and cross-appeal concern a dispute between a paint manufacturer and a painting subcontractor on whether latent defects in the supplied paint led to the serious discolouration of the internal surfaces at various parts of a building project. The subcontractor sued for losses, ie, expenses which it had incurred in repainting the affected surfaces. The manufacturer in turn made a counter-claim for the balance sum due on the paint sold to the subcontractor.

A High Court judge (“the Judge”) dismissed the subcontractor’s claim and allowed the manufacturer’s counterclaim for the sum of $72,676.62; see Anti-Corrosion Pte Ltd v Berger Paints Singapore Pte Ltd [2010] SGHC 351 (“the judgment”). In dismissing the claim by the subcontractor, the Judge found at [19] of the judgment that “the [appellant] has not proven on balance of probability [sic] that the defects in [the paint] had caused the discolouration”. Pertinently, at [21] of the judgment, the Judge also determined:

… that if I had to decide on the issue of the warranty, I would have found that [the Respondent]] had warranted all its products used in any of the plaintiff’s projects for a period of 5 years provided that the use was based on a proposed paint system by the defendant.

Both parties now appeal against different aspects of the judgment below. The subcontractor contends that the Judge had erred on the issue of causation while the manufacturer is appealing against the above-mentioned dictum of the Judge on a warranty purportedly given by it to the subcontractor. We now give our decision and the reasons for it. Background Parties to the dispute

The subcontractor is Anti-Corrosion Pte Ltd (“the Appellant”). It provides construction and renovation services, which include paint application works. Its managing director is Lim Choon Lin Vincent (“Vincent Lim”). Among the Appellant’s personnel, he was the one who liaised most often with the Respondent’s representatives.

Berger Paints Singapore Pte Ltd (“the Respondent”) is the paint manufacturer and supplier. Its sales representative, Joseph Yong, conducted the sale negotiations with Vincent Lim. Rajeev Goel is the Respondent’s regional technology manager who was in charge of the Respondent’s investigations after the paint discolouration occurred. Its superior was Jaideep Nandi, the chief executive officer of the Respondent.

Facts

The Respondent supplied the Appellant with paint on three separate occasions prior to the project in question. The first time it did so was in 2005 for the painting of the external surfaces of a Toh Guan dormitory. The project was completed without any complaints.

Subsequently, in January 2006, the Respondent proposed to the Appellant and supplied a paint system for the Toh Guan Road East Capital One project (“the Toh Guan project”). Unlike the earlier project, the painting works were for external and internal surfaces. The Respondent’s Decora Emulsion paint (“the paint”) was used for the internal surfaces. The Respondent’s product data sheet stated, inter alia, that the Appellant was to “[a]pply a suitable sealer coat such as Berger Plastaseal or Berger Water-Based Sealer” prior to the application of the paint.¹ Despite this, the Respondent’s proposed paint system for internal surfaces did not include a sealer coat. It merely stated:² Internal Concrete Surfaces Including Ceiling Primer Coat : 1 coat of Berger Decora Emulsion Finishing Coat : 1 coat of Berger Decora Emulsion On receipt of the Respondent’s proposal, Vincent Lim expressed concerns over the necessity of applying a sealer coat. His concerns were quickly brushed aside by Joseph Yong, vide a letter dated 12 January 2006:³

:Proposed Paint System for Toh Guan Road East Capital One With reference to the above subject and our discussion regarding the coating for the internal concrete surfaces including ceiling.

We are pleased to forward out letter for your submission to your client that it is not a [sic] necessary to apply a sealer coat before applying Berger Decora Emulsion even though it was stated in our product datasheet.

[emphasis added]

This was not all that Joseph Yong did to prevail upon the Appellant to accept the Respondent’s proposal. He again directly addressed the Appellant’s concerns in a subsequent letter (“13 January letter”):⁴

Subject: Warranty With reference to the above subject, we will be providing you with five (5) years warranty on our products used in any of your up coming project as long as is based on our proposed paint system [sic].

[emphasis added]

The Toh Guan project was completed uneventfully. After this, the Respondent supplied paint to the Appellant for a third project at No 2 Toh Tuck Link (“the Toh Tuck Link project”). For this, it did not submit a proposal for a paint system.

The Respondent then supplied the Appellant with the same Decora Emulsion paint for a project at Bukit Batok Street 23 (“the Bukit Batok project”) ─ the subject matter of the present appeals. We set out now the circumstances that led to this supply of paint for the Bukit Batok project. The Appellant had been awarded the contract to paint the internal and external surfaces of the buildings by the main contractor, Eng Siang Lee Construction Co Pte Ltd (“ESL”), on 15 August 2007. As before, the Respondent’s proposal for the paint system made on its official notepaper and captioned “Proposed Paint System for Bukit Batok St 23” did not include a sealer coat.⁵ Again, the Respondent’s Decora Emulsion paint was the only paint identified as appropriate for the painting the internal surfaces. There was absolutely no suggestion that it was not fit for the intended usage or that a sealer coat was necessary. However, unlike the Toh Guan project, the Appellant did not receive additional written confirmation from the Respondent that a sealer coat was unnecessary.

The Appellant’s account was that, having learnt about the Appellant’s intended bid for the Bukit Batok project, Joseph Yong approached Vincent Lim in July 2007 with a proposal to use the Respondent’s paint. The Appellant asserts that it had relied on the Respondent’s assurances on the suitability of the paint in submitting its winning bid for the project. Joseph Yong, it maintains, gave similar verbal assurances about the suitability of using the paint without the prior application of a sealer coat to Vincent Lim. Vincent Lim testified that this was the reason why he did not seek written confirmation from the Respondent that a sealer coat was unnecessary. He was also led to believe the warranty, as stated in the 13 January letter, would continue to apply to this project.

The Respondent disputed the Appellant’s claim that Joseph Yong actively sought the latter’s business support or that he advised the Appellant on the paint system. The Respondent claimed that it supplied paint to the Appellant on a “supply-only” basis⁶ and that the Appellant purchased the paint not because of Joseph Yong’s advice but because it was cheap. Regrettably, we note that the Respondent did not take steps to ensure that Joseph Yong testified in Court. All the Respondent could baldly state was that its advice on the appropriate paint system for the Bukit Batok Project was not given. We therefore accept Vincent Lim’s evidence on these issues.

The requisite painting works were carried out between September 2007 and April 2008. During this period, the Respondent delivered the paint to the Appellant as and when the latter required it. According to the Respondent, the paint came from several different production batches. The Judge at [6] of the judgment noted that the paint came from 31 batches but the Respondent now asserts that the correct number of batches is 30. In the final analysis, it does not matter which is the true number. However, what is clear is that the paint supplied came from no less than 30 different batches. These constituted about 44,000 litres of paint. The Appellant was required to sign a delivery order and would be given a tax invoice every time the paint was delivered. The parties, we ought to mention, disagree over whether the terms of these documents formed part of the contract, in particular whether exemption clauses contained in them could be used to limit the Respondent’s liability and/or exclude terms implied by the Sale of Goods Act (Cap 393, 1999 Rev Ed) (“SGA”).

Sometime in April 2008, it was observed that there was serious pinkish discolouration of the paint on the internal surfaces of the Bukit Batok Project. The Judge found, in the judgment at [12] that the discolouration was widespread and occurred in most, if not all, of the surfaces. There is no dispute over this finding of fact. On 16 April 2008, ESL (see above, at [8]) complained to the Appellant that the paint on the internal surfaces had discoloured. The Appellant promptly relayed this complaint to the Respondent in a letter dated 18 April 2008.⁷ In this letter, it alleged the Respondent’s paint was defective and that it was “very worry [sic] about [the Respondent’s] products” as another complaint had surfaced in relation to the paint it had used for the Toh Tuck Link project. It reiterated this allegation in a further letter dated 21 May 2008.⁸ The Respondent responded on the same date denying its paint was defective. It emphatically asserted that Decora Emulsion was a low cost interior emulsion. It added that “[o]ne of the key criterion [sic] for the paint to be applied is that a sealer coat is used prior to the application of the paint” and while “[i]n certain cases, the paint may perform without the usage of sealer … that is not a recommended practice...”.⁹ The Respondent also stated that it had commenced an internal investigation and offered to share the results of this with the Appellant to show that the paint was not defective. Significantly, the...